In a labor market in which firms offer tied hours-wage packages and
there is substantial dispersion in the wage offers associated with a
particular type of job, the best job available to a worker at a point in
time may pay well but require an hours level which is far from the worker's
labor supply schedule, or pay poorly but offer desirable hours.
Intuitively, one would expect hours constraints to influence the pattern of
wage-hours tradeoffs which occur when workers quit to new jobs. Constrained
workers may be willing to sacrifice wage gains for better hours. Likewise,
workers may accept jobs offering undesirable hours only if the associated
wage gains are large. We investigate this issue empirically by examining
whether overemployment (underemployment) on the initial job increases
(reduces) the partial effect on the wage gain of a positive change in hours
for those who quit. We also examine whether overemployment
(underemployment) on the new job increases (reduces) the partial effect on
the wage gain of a positive change in hours for those who quit. Despite the
limitations imposed by small sample sizes and lack of information on the
magnitude of hours constraints, our results support the view that an
individual requires compensation to work in jobs which, given the
individual’s particular preferences, offer unattractive hours.